Inflation Analysis on 4, February, 2010

The decline in WPI on a week to week basis is primarily due to seasonal effect, nothing more should be read out of this declining figure. We still have a rising inflation in non-seasonal food articles on a week to week basis. If we look at the price build up in wheat & pulses in the current year it is very evident that we are in times of very high inflation in the coming months. The winter rains have not come & various claims that we are hearing that the inflation would come down seem doubtful to me. Even if we have some winter rains now, I feel, it would have negative impact on agricultural. I have my doubts if we can sustain these levels of IIP numbers with no disposable income available to the general mass. I think it is high time that the government & the banks start looking at funding agriculture and infrastructure rather than funding cars